You were injured. You sought out justice. You finally receive your personal injury settlement check, and the amount isn’t what you expected it to be.
A common misconception in personal injury law is that the entire settlement amount goes straight into the injured party’s pocket, but it isn’t that simple. Navigating the outcome of your settlement is another complicated part of recovery, one that a skilled personal injury lawyer can guide you through when you’re already in a stressful financial situation.
So, this begs the question, “Where does the settlement money go?”
Keep reading as our team at Hoffman Law Firm explains how a personal injury settlement is disbursed and how we can ensure you receive the compensation you deserve.
The Big Misconception
When personal injury settlement payouts occur, they are not sent directly to the injured party. Instead, the settlement will be issued to your personal injury attorney and put into a client trust account. Then, payments are made to the respective parties involved in the personal injury case, such as your healthcare providers for unpaid medical bills, collection agencies for outstanding medical liens, legal fees, and any other approved costs.
While this may feel like you’ve been misconstrued, it’s simply a part of the process. Multiple parties may have a legal claim to a portion of the settlement, as paying off these debts is often a goal of financial recovery. This is why it is important to have a knowledgeable attorney by your side to explain your case, the rights you’re entitled to, and to fight for maximum compensation.
The Settlement Disbursement Waterfall
Here is how a personal injury settlement breakdown will typically look, but your actual disbursement depends on the details of your case.
Case Costs/Expenses
Costs and/or expenses of your case can include filing fees, expert witness fees, record requests, and depositions. Often, attorneys will advance these fees during your case, then get reimbursed once it’s settled.
Attorney’s Fees
Part of your settlement goes directly back to your attorney and paralegals to pay them for the work they’ve done on your case. This percentage varies by law firm and is agreed upon before moving forward with your case.
Medical Liens and Subrogation Claims
Another portion of your settlement will go toward your outstanding medical bills. These parties may include hospitals, medical offices, health insurance, or Medicare/Medicaid. Subrogation occurs when your insurance company covers your medical treatment right after an accident, so they will have to be paid back if a subrogation claim is a part of your case.
The rest of the settlement balance will be distributed to you.
Is My Settlement Taxable?
In a personal injury settlement, some components are taxable, and some are not. Damages compensated for physical injuries or illnesses are generally not taxable. These damages can include medical bills, lost wages resulting from the injury, or pain and suffering from the physical injuries.
Other components of your case, such as punitive damages, mental and emotional distress from non-physical injuries, or reimbursement of previously deducted medical costs, may be taxed. Your settlement agreement should outline how damages will be categorized, which will therefore determine the taxability.
Once you’ve received your settlement, consult a tax professional to gain a better understanding of what is taxable and what to expect the next tax season.
How Hoffman Law Firm Maximizes What Clients Keep
At Hoffman Law Firm, we believe you deserve every penny you’ve had to sacrifice during your recovery. To help our clients maximize their settlement, we provide:
- No upfront attorneys’ fees
- Free consultation
- The lawyer you meet with is the lawyer who sees your case through
At Hoffman Law Firm, we value communication and transparency. With decades of combined legal knowledge, our injury team is highly skilled in fighting for what you deserve, and we have the track record to prove it.
Get the Most Out of Your Settlement with Help From Hoffman Law Firm
Your personal injury settlement amount should come as a surprise in a good way, but it’s important to understand where every dollar goes. That’s why, when you get injured, you should leave it to Hoffman. Not only will our team fight for your maximum compensation, but we’ll also carefully outline every detail, so you know exactly what is going on every step of the way.
With offices in Georgetown, SC, and Charleston, SC, our personal injury law firm supports accident victims throughout the Palmetto State. As the leading car accident lawyers in Charleston and Georgetown, we have established a reputation for success and exceptional service.
Schedule your free consultation today with a personal injury attorney in Charleston or Georgetown, SC, and we will take it from there.
Disclaimer & Disclosure: Information on this page is for general informational purposes only and is not legal, tax, or financial advice. Personal injury settlements, attorney fees, case expenses, medical liens, insurance subrogation claims, and settlement distributions vary by case, agreement, and applicable law. No outcome or amount of compensation is guaranteed.
Tax treatment of settlement proceeds depends on the nature of the damages and individual circumstances. Consult a qualified tax professional regarding your specific situation.
Hoffman Law Firm represents clients in personal injury matters and may receive attorney fees and reimbursement of case expenses from a settlement as provided by the applicable fee agreement. No upfront attorney fees may apply to qualifying cases; terms vary by case.
Past results do not guarantee or predict future outcomes. Contact Hoffman Law Firm for information regarding your specific legal matter.
